Island gets UK backing on tax
Tuesday 10th March 2009, 3:00PM GMT.
THE UK will fight Jersey’s corner at the G20 conference after the Island agreed to share income tax data with the UK tax authorities.
The agreement to be signed by Chief Minister Terry Le Sueur and Treasury Financial Secretary Stephen Timms in London tomorrow explicitly sets out the UK’s backing for the Island’s finance regulation system.
The agreement states: ‘The UK recognises Jersey as a member of the community of jurisdictions committed to international co-operation and information exchange on tax matters, and wishes to assure the States of Jersey that Jersey will be treated as such by the UK authorities.’
This goes further than the UK has ever gone before in backing Jersey’s finance industry and is an important statement of support in the build-up to the G20 conference of international treasury ministers at which offshore finance is likely to be a major and controversial talking point.
Jersey already has ten TIEA agreements with the United States and Germany as well as Nordic nations. A second deal will be signed with France in Paris this week, and talks with Ireland are progressing.
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Can someone explain why Jersey is not a tax haven and what exactly Jersey does as I have heard all sorts of different opinions.
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This probably means the politations hope they have saved the finance industry. They will have thier wish, to continue to stangle Jersey with over population and greed. And to continue with the concrete jungle they want to build.
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In a nutshell Jersey assists people with tax avoidance rather than tax evasion. That’s the prime difference.
Avoidance basically is the reduction of your income tax (and other taxes like inheritance etc) liability through efficient structuring, sometimes through trusts whereby you legally transfer all legal title to the assets to a third party, like a Jersey trustee. All perfectly legal and you can remain living in your home country and pay your regular taxes as anyone else would.
Evasion on the other hand is deliberately not paying taxes due by you through illegal means. A very basic method would simply be by departing from Jersey without paying your income tax for the prior year.
Lots of people include the international media mix the two up.
Other people like the ‘haven’ tag applied to any country where tax is (to an outside viewer) significantly lower than where they live. However, with a name like du Feu I assume you’re local and are all too well aware that we pay a decent rate of income tax and any perceived imbalance say with the UK is more than made up through the ridiculous cost of living.
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the shadow may moan, but it is better to go forward with clear direction.
Chief Minister Terry Le Sueur is to be congratulated.
Annie (1). If half the stories I have heard are true, the general public would be alarmed.
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Governments have allowed tax shelters to exist under their overall jurisdiction as it is often of benefit to them eg Jersey and Guernsey are of considerable benefit to the City of London.
So the industry is dependent on the continued support and goodwill of the United Kingdom and to a lesser extent other states.
Certainly things could be made very difficult for us if the UK decided to move against the industry but there are probably easier and fatter targets out there at the moment.
In about five years time we wil know where we stand.
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Dear outsider (3), thanks for the explanation.
So is tax ‘avoidance’ ok then?
Or is it just searching for loopholes, and ways to avoid giving back something to your local community, to improve social services, infrastructures, etc?
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Outsider, Annie
True, but avoiding and evading tax both reduce in lesser tax collection for the country where the respective individual resides – something which is set to be put under some scrutiny in the coming months, thus representing a significant threat to Jersey’s finance industry.
Mark
TLS is looking for short term praise and a deferal of the inevitable, he is not addressing the long term issue described above.
I’d also agree with you that there is still secrecy, still the ability to cover up, and not enough regulation – even if the JFSC believes there is!
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This is the news we have been waiting for, unlike the Jersey people who have tried to destroy our main provider of income.
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3. Outsider are you saying the rich have regular and irregular taxes? In my opinion everyone should pay tax on any income from any source. This fudging the issue as wether it is legal or it is illegal doesn’t get away from the fact that others have to make up tax shortfalls in the countries affected. If a level playing field were adopted then everyone would loose the same percentage of tax from their income in their own country.
My advice, diversify before you are forced to by outside forces.
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Oh dear! Whatever next,i was speaking to a Jersey lady today and she said she would be over the moon if 30,000 people left the island.
That way we could have the island back to ourselves!Bit selfish perhaps.???
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Does anyone know the reason for the G20 conference? I’ve read that the (secret) agenda may include the devaluation of world currencies to reduce the debt payable by the USA & other countries. In simple terms, our money will buy even less in future! There will be further discussion towards a single world currency. It will be interesting to discover if this is indeed what the meeting is about. It’s all very well having signed agreements, but when the British government decide to do something, they move the goalposts to suit themselves and leave the other party out in the cold!
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I understand exactly how people from other countries must feel when they see money, which should be paid in their country to help them, not being paid because of a legal system in a foreign jurisdiction. I understand because we are victims of similar tax avoidance mechanisms on our own doorstep.
It is unfair that 11k’s can legally avoid paying a fair rate of tax by having the ability to negotiate their contribution to society.
It is unfair that you and I are paying a tax to make up for the tax being legally avoided by companies bringing their wealth to Jersey.
Yes, I understand the anger felt when your life is made harder just so that the rich can get richer.
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Bean up all night – you could get over your upset and consider the matter from another angle – rich 11(K)s choose to pay tax to Jersey rather than another country, you are most definitely not losing out by their presence, they are subsidising an expensive state infrastructure that could never survive on yours or my taxes alone! Ironically if they wanted to just save tax their are plenty of lower tax jurisdictions they could move to. I returned to Jersey when I was 30 (not wealthy!) for the quality of life, not the lower taxes.
As for the UK and USA losing out – I never heard either country complaining that over half of global wealth flows through their (badly regulated and managed) financial systems. Jersey does a better job of looking after the money in its financial sector from what I can see.
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Will the lady who wants Jersey to herself, please step forward !! What a selfish way of thinking. The world is for everyone and anyone who thinks differently should step off !!!
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Re Number 6
Avoidance is ok in the sense that it is legal.
Whether one feels it is morally ok or not is another thing entirely.
Giving back to your community is an entirely different matter, albeit a very important one, but not in this context. You’ll quite often find that a lot of the people who have set up trust structures in Jersey give considerable amounts to charity in their home state but will do anything within their means to reduce their tax bill. Giving to charity is quite often tax deductable.
We must bear in mind that the benefactors of these loopholes in international tax laws are to our benefit. Like it or loathe it, the finance industry in Jersey is the main contributor to the provision of all services in the island. I am not a J cat, I am someone who has paid my taxes for a number of years but am yet to obtain qualies so in the interim am fleeced for sub-standard accommodation.
To all those who shout ‘Jersey for the beans’ I suggest you take a step back and think about what would be left were the finance industry to implode. Yes, there may be a return to a nicer, quieter island (which I myself would love) but living standards would drop significantly.
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I think the issue isnt idividuals avoiding tax, the issue is around companies avoiding tax by locating themselves in so called offshore tax havens.
In reality the amount of tax lost through individuals avoiding tax is much lower than that of companies that trade every day in large sums of money.
I watched a program a few months back that highlighted the issue.
A company that supplies bananas for tesco was the example given, the cost of the bananas was about £1.40 but by the time tesco sold them they made 1p on the bananas, the rest went to the supplier and various marketing companies that were all registered to offshore tax havens like jersey.
So the only money that was taxed was the 1p that tesco put on top of the price of the bananas.
Understandably this can make some countries angry.
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Law and ethics.
There are lots of practices around the world which are legal in a certain place but which people may consider ethically or morally wrong; the death penalty or euthanasia for example.
It is only when a jurisdiction’s legal but ethically wrong practices affect other jurisdictions that the former has to become concerned.
Our practices may be legal (hypothetically) but so long as the ‘superpowers’ consider that it is having a harmful effect on their jurisdiction we will have a serious concern.
In that sense, whether it is tax evasion or tax avoidance is irrelevant.
If there is anyone who thinks that we can’t be forced to change, consider why we no longer have corporal punishment and we we had to introduce a Human Rights Law.
Europe would not play with us if we didn’t.
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